UK jobs growth jumps again despite broader economic slowdown

LONDON, (Reuters) – The number of people in work in Britain jumped again in the last three months of 2019, according to data which underscored how the labor market defied a slowing of the broader economy ahead of December’s election.

The number of people in work jumped by 180,000 to 32.934 million, at the top end of forecasts in a Reuters poll of economists.

Full-time employment accounted for most of the growth while self-employment also rose strongly, the Office for National Statistics data showed.

Signs of weakness in Britain’s labor market in the autumn prompted two Bank of England interest-rate setters to vote for a cut to borrowing costs.

But the BoE’s other seven rate-setters have kept borrowing costs on hold amid signs that the economy picked up in early 2020 following Prime Minister Boris Johnson’s sweeping election victory on Dec. 12.

The number of people out of work dropped by 16,000 to 1.290 million, the ONS data showed.

The unemployment rate of 3.8% remained at its joint lowest level since early 1975.

In another sign of confidence among employers about their hiring intentions, vacancies in the three months to January rose to 810,000, their highest since the three months to September 2019.

However, growth in pay has slowed steadily in months.

Total earnings growth including bonuses, rose by an annual 2.9%, the weakest increase since the three months to August 2018.

Excluding bonuses pay growth also slowed to 3.2%, its weakest increase since the third quarter of 2018.

Economists had expected total pay to grow by 3.0% and regular pay to grow by 3.3%.

“In real terms, regular earnings have finally risen above the level seen in early 2008, but pay including bonuses is still below its pre-downturn peak,” ONS statistician Myrto Miltiadou said.

Many employers remain worried that uncertainty about Brexit will grow again in 2020 because Johnson has ruled out extending a Brexit transition beyond the end of the year, saying he will clinch a free trade deal with the European Union by then.

The data also showed Britain’s productivity growth – the flipside of strong increases in jobs – remained weak at the end of last year.

Output per hour in the fourth quarter rose by 0.3% in quarterly and annual terms.

The year-on-year growth rate was the strongest since second quarter of 2018 but the ONS said the numbers did not represent a breakthrough.

“Over the longer term, growth in productivity remains much slower than before the economic downturn of 2008-09,” ONS statistician Richard Heys said.

(Reporting William Schomberg and David Milliken; william.schomberg@thomsonreuters.com; +44 20 7542 7778)